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Parents who are self-employed must file taxes with the Internal Revenue Service (IRS) for the self-employment to be an approved activity.

After the renewal that follows the 24th month of new self-employment, the self- employment only qualifies as an approved activity if annual net business income equals $400 or more. An ongoing business that generates less than $400 annual net income is considered a hobby for Wisconsin Shares purposes and not an approved activity.

Identifying Self-Employment Agency workers should review the questions/statements below to determine if a parent is self-employed or employed when it is unclear whether the activity is employment or self-employment. Not all questions are applicable to all self-employed parents, and the answers to some of these may resolve the question of self-employment or employment without needing to answer further questions. For example, receipt of an IRS Form 1099 is enough to show that it is not an employee-employer relationship. 1. Does the parent have or have they applied for a tax ID number? If the business has employees, an Employer Identification Number (EIN) is required by the IRS. Some businesses use the individual’s SSN to report their earnings. 2. Does the parent receive an IRS Form 1099 at year end? If so, they are self- employed. If they receive a W-2 Wage and Tax Statement, they are employed. 3. What is the nature of the business? If the parent states they are a farmer, do they have their own farm or work on someone else’s farm? 4. Who are their customers? The parent should be able to explain to whom they provide their product or service. 5. Do they have an online presence? Most businesses have a website, advertise online, and/or have a social media account. 6. Does the parent maintain a separate location to deliver their product or service? A self-employed hair stylist can rent a work space in a salon where they use their own equipment. 7. Does the parent set their own hours, provide materials, and use their own tools and equipment? 8. Does the parent incur the main expenses related to the services that they perform under contract? A self-employed truck driver owns their truck and pays for insurance, repairs, and maintenance. 9. Does the parent have a contract to provide goods or services? A construction business has a contract with the customer for building a new home. 10. Does the parent receive compensation for services performed under a contract on a commission or per-job basis and not on any other basis? If the parent is paid a salary, they typically are not self-employed but employed.